CONVERGENCE
printer friendly formatemail this page

BANK SALES OF INSURANCE AND MUTUAL FUNDS

Since 1999 when Congress passed the Gramm-Leach-Bliley Financial Services Modernization Act, enabling financial services companies to sell each other’s products, banks have greatly expanded their business beyond their traditional offerings to include sales of insurance and securities. Sales of nonbanking products now make up an increasing part of their revenue.
BANK-PRODUCED INSURANCE PREMIUMS, 1998-2003 (1)

($ billions)









Annuities$19.6$24.2$31.0$37.1$47.7$51.6163.3%
Commercial lines (2)4.04.45.48.911.514.2255.0
Personal property/casualty2.93.13.74.15.06.3117.2
Credit coverages2.92.92.72.82.53.624.1
Individual life/health1.51.82.12.32.82.460.0
Total$30.9 $36.4 $44.9 $55.2 $69.5 $78.1 152.8
Annual growth11.6%17.8%23.4%22.9%25.9%12.4%NA

(1) Estimated.
(2) Includes commercial property/casualty and group benefits premium.

NA=Not applicable.

Source: American Bankers Insurance Association.

BANK INSURANCE PREMIUMS, BY TYPE OF COVERAGE, 2003 (1)

($ billions)



(1) Total estimated at $78.1 billion.
(2) Commercial property/casualty and group benefits premiums.

Source: American Bankers Insurance Association.


  • In 2003, bank insurance premiums increased by 12 percent to an estimated $78.1 billion from $69.5 billion the previous year, according to a survey conducted by the American Bankers Insurance Association.

  • In 2003, banks accounted for almost a quarter of total annuity sales, 7 percent of commercial lines insurance sales, and 3 percent of personal lines insurance sales.

PRIMARY BANK INSURANCE DISTRIBUTION CHANNELS, 2003

(Percent)


 

Property/casualty

Life/health





Acquired agency53.1%67.1%29.4%51.9%
Carrier direct22.219.019.314.8
De novo (1)19.815.220.223.5
Joint venture (2)11.111.424.417.3
Third-party marketer7.45.125.211.1

(1) Joint venture or marketing alliance with an insurance agency.
(2) Agency originated by the bank without acquisition of a platform agency.

Source: American Bankers Insurance Association.

BANK SALES OF LIFE INSURANCE: NEW (FIRST YEAR) PREMIUMS, 2001-2004

($ millions)





2001$452
2002643
2003926
20041,366

Source: Kenneth Kehrer Associates.

  • Bank sales of new life premium, which contain single premium products, rose 48 percent in 2004.

BANK LIFE INSURANCE SALES, 2001-2004 (1)

(Weighted premium, $ millions)



(1) Sales are based on weighted premium, discounting 90 percent of single premium (one-time payment) products to approximate the expected value of premium flows to life insurance companies each year.

Source: Kenneth Kehrer Associates.

  • Total bank sales of life insurance rose 35 percent in 2004, compared with 2003, based on “weighted premium,” a formula that gives recurring premium products more weight than single premium products.

BANK MARKET SHARE OF LIFE INSURANCE SALES, 2001-2004 (1)

(Based on weighted premium)



(1) Sales are based on weighted premium, discounting 90 percent of single premium (one-time payment) products to approximate the expected value of premium flows to life insurance companies each year.

Source: Kenneth Kehrer Associates.

BANK SHARE OF FIXED-ANNUITY PREMIUMS, 1995-2004

($ billions)





1995$49.4$10.721.7%
199638.910.326.5
199738.210.026.2
199832.98.524.8
199942.112.530.0
200052.815.429.2
200171.527.438.3
200298.636.436.9
200381.632.039.2
200484.430.335.9
Source: Kenneth Kehrer Associates; LIMRA International. 
BANK SHARE OF VARIABLE-ANNUITY PREMIUMS, 1995-2004

($ billions)





1995$49.3$3.57.1%
199672.56.99.5
199787.99.310.6
199898.611.211.4
1999114.413.912.2
2000137.715.611.3
2001112.810.99.7
2002119.312.510.5
2003129.218.114.0
2004133.518.013.5
Source: Kenneth Kehrer Associates; LIMRA International. 
BANK SALES OF RETAIL MUTUAL FUNDS, 2000-2004

($ billions)



Source: Kenneth Kehrer Associates.

  • Bank sales of retail mutual funds were down 3.4 percent from 2003 to 2004.
BANK INSURANCE/INVESTMENT FEE INCOME

BANK TOTAL INSURANCE FEE INCOME, 2001-2004 (1)


 

Reporting insurance fee income

 

 

 






20014,27649.8%$2.98$696,524$21,000
20024,35952.03.49801,68719,000
20034,14050.23.60869,11319,000
20044,04250.04.331,070,01619,000

(1) Income from underwriting and brokerage activities.

Source: Michael White’s Bank and Bank Holding Company Insurance & Investment Fee Income Reports.

  • From 2001 to 2004, banks bought 231 insurance agencies. (see Bank Purchases of Insurance Agencies in this chapter.)

BANK INVESTMENT FEE INCOME, 2001-2004 (1)


 

Reporting investment fee income

 

 

 






20012,33127.1%$9.16$3,930,462$54,000
20022,33827.99.113,895,96258,000
20032,33128.210.164,357,72561,000
20042,30428.59.794,249,14668,000

(1) Income from investment banking, advisory, brokerage, and underwriting fees and commissions.

Source: Michael White’s Bank and Bank Holding Company Insurance & Investment Fee Income Reports.

  • From 1999 to 2004, banks bought an average of 53 securities firms each year. (See Mergers and Acquisitions of U.S. Securities Firms, Chapter 7, Securities.)

BANK MUTUAL FUND AND ANNUITY INCOME, 2001-2004


 

Reporting mutual fund and annuity income

 

 

 






20012,13224.8%$5.51$2,585,624$52,000
20022,16125.85.832,699,70660,000
20032,10525.55.532,626,85865,000
20042,06725.65.622,718,86677,000

Source: Michael White’s Bank and Bank Holding Company Insurance & Investment Fee Income Reports.

BANK PURCHASES OF INSURANCE AGENCIES,
2001-2004 (1)







Number of deals57645654
Deal value (2) ($ millions)$399.0$137.5$602.7$88.5

(1) List does not include terminated deals.
(2) At announcement.

Source: SNL Financial LC.

  • While the number of bank/agency deals decreased by 4 percent from 2003 to 2004, the value of those deals decreased by 85 percent.

TOP BANKS IN INSURANCE AND MUTUAL FUNDS

TOP TEN BANKS IN TOTAL INSURANCE FEE INCOME, 2004 (1)

($000)


 

 

 

Insurance fee income

 








1Citibank, N.A.NY$742,000 $932,000 25.61%4.80%$694,529,000
2Branch Banking and Trust CompanyNC379,426 604,876 59.4235.1774,479,112
3Chase Manhattan Bank USA, N.A.DE139,830 219,261 56.814.3988,743,171
4MBNA America Bank, N.A.DE231,941 200,536 -13.542.5158,268,872
5Citibank (Delaware)DE81,854 113,827 39.0628.985,942,823
6Bank of America, N.A.NC98,612 109,606 11.150.87771,618,758
7Fleet National BankRI63,000 99,255 57.553.14218,740,377
8Wells Fargo Bank, N.A.SD8,000 92,000 1,050.000.94366,256,000
9Union Bank of California, N.A.CA62,652 77,874 24.307.9947,485,217
10Commerce Bank/NorthNJ66,009 71,970 9.0383.843,278,347

(1) Income from underwriting and brokerage activities. Ranked by 2004 total insurance fee income.

Source: Michael White’s Bank and Bank Holding Company Insurance & Investment Fee Income Reports.

TOP TEN BANKS IN INSURANCE UNDERWRITING INCOME, 2004

($000)


 

 

 

Insurance underwriting income  

 







1Citibank,  N.A.NY$275,000 29.51%1.42%$694,529,000
2Wells Fargo Bank, N.A.SD90,00097.830.92366,256,000
3Citibank (Delaware)DE61,67254.1815.705,942,823
4National City Bank of the MidwestIL39,88959.648.3422,717,289
5Standard Federal Bank, N.A. MI39,83893.6617.4839,128,455
6Wachovia Bank, N.A. NC26,00076.470.44389,963,000
7SunTrust BankGA25,01556.691.11130,780,100
8Wells Fargo Financial BankSD20,850100.0041.342,054,798
9U.S. Bank N.A.OH19,72286.020.38194,436,638
10Branch Banking and Trust Company NC12,0191.990.7074,479,112
Source: Michael White’s Bank Insurance & Investment Fee Income Report - 2004 Year-End.
TOP TEN BANKS IN INSURANCE BROKERAGE FEE INCOME, 2004 (1)

($000)


 

 

 

Insurance brokerage fee income

 








        
1Citibank, N.A.NY$552,000 $657,000 19.02%3.38%$694,529,000
2Branch Banking and Trust CompanyNC365,885 592,857 62.0334.4774,479,112
3Chase Manhattan Bank USA, N.A.DE94,170 212,902 126.084.2788,743,171
4MBNA America Bank, N.A.DE231,941 200,536 -13.542.5158,268,872
5Bank of America, N.A.NC87,754 107,382 22.370.85771,618,758
6Fleet National BankRI63,000 99,255 57.553.14218,740,377
7Union Bank of California, N.A.CA62,652 77,874 24.307.9947,485,217
8Commerce Bank/NorthNJ66,009 71,970 9.0383.843,278,347
9Fifth Third BankOH0 66,437 NA3.4756,807,417
10First Tennessee Bank, N.A.TN55,446 56,704 2.274.3029,513,702

(1) Ranked by 2004 insurance brokerage fee income.

NA= Not applicable.

Source: Michael White’s Bank Insurance & Investment Fee Income Report - 2004 Year-End.

TOP TEN BANKS IN INVESTMENT FEE INCOME, 2004 (1)

($000)


 

 

 

Investment fee income

 








1JPMorgan Chase Bank, N.A.OH$2,183,000 $2,590,000 18.64%15.35%$967,365,000
2Bank of America, N.A.NC1,145,600 1,538,483 34.29%12.19%771,618,758
3PNC Bank, N.A.PA562,482 746,475 32.71%33.68%73,809,165
4Fleet National BankRI504,000 649,920 28.95%20.56%218,740,377
5Wachovia Bank, N.A.NC616,000 611,000 -0.81%10.26%389,963,000
6The Bank of New YorkNY455,362 381,673 -16.18%9.03%92,138,427
7Wells Fargo Bank, N.A.SD151,000 302,000 100.00%3.08%366,256,000
8U.S. Bank N.A.OH36,856 262,921 613.37%5.05%194,436,638
9SunTrust BankGA234,805 228,944 -2.50%10.17%130,780,100
10Deutsche Bank Trust Co. AmericasNY806,000 158,000 -80.40%9.89%33,341,000

(1) Income from investment banking, advisory, brokerage, and underwriting fees and commissions. Ranked by 2004 investment fee income.

Source: Michael White’s Bank Insurance & Investment Fee Income Report - 2004 Year-End.

TOP TEN BANKS IN MUTUAL FUND AND ANNUITY INCOME, 2004 (1)

($000)


 

 

 

Mutual fund and annuity income

 








1Bank of America, N.A.NC$497,716 $875,768 75.96%6.94%$771,618,758
2PNC Bank, N.A.PA554,935 754,762 36.0134.0673,809,165
3Wachovia Bank, N.A.NC594,000 574,000 -3.379.64389,963,000
4Fleet National BankRI418,000 476,924 14.1015.09218,740,377
5JPMorgan Chase Bank, N.A.OH247,000 446,000 80.572.64967,365,000
6U.S. Bank N.A.OH36,856 262,921 613.375.05194,436,638
7Wells Fargo Bank, N.A.SD101,000 245,000 142.572.50366,256,000
8The Bank of New YorkNY222,334 206,428 -7.154.8892,138,427
9SunTrust BankGA136,406 142,550 4.506.33130,780,100
10Fifth Third BankOH117,155 124,391 6.186.4956,807,417

(1) Ranked by 2004 mutual fund and annuity income.

Source: Michael White’s Bank Insurance & Investment Fee Income Report - 2004 Year-End.

TOP TEN BANKS IN PROPRIETARY MUTUAL FUND AND ANNUITIES
ASSETS UNDER MANAGEMENT, 2004 (1)


($000)


 

 

 

Propriety assets under management (2)

 







1JPMorgan Chase Bank, N.A.OH$107,294,000 $209,727,000 95.47%$967,365,000
2Bank of America, N.A.NC132,002,989 123,095,553 -6.75771,618,758
3Wachovia Bank, N.A.NC109,359,000 104,577,000 -4.37389,963,000
4PNC Bank, N.A.PA86,766,687 93,833,604 8.1473,809,165
5Fleet National BankRI87,176,000 87,163,553 -0.01218,740,377
6U.S. Bank N.A.OH58,179,672 56,532,570 -2.83194,436,638
7The Northern Trust CompanyIL44,581,364 44,379,964 -0.4537,043,931
8State Street Bank and Trust CompanyMA31,192,800 31,369,849 0.5790,268,259
9National City Bank of the MidwestIL19,416,569 17,201,379 -11.4122,717,289
10The Bank of New YorkNY12,502,664 13,742,788 9.9292,138,427

(1) Ranked by 2004 proprietary assets under management.
(2) Proprietary mutual fund and annuities assets under management.

Source: Michael White’s Bank Insurance & Investment Fee Income Report - 2004 Year-End.